Free Reply to Response to Motion - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS Filed Electronically on April 17, 2006 ) ) ) ) ) ) ) ) ) ) ) )

YANKEE ATOMIC ELECTRIC CO., Plaintiff, v. UNITED STATES OF AMERICA, Defendant.

No. 98-126C (Senior Judge Merow)

YANKEE ATOMIC'S REPLY ON ITS MOTION TO AMEND COMPLAINT 1 It is now more than eight years since the filing of Yankee Atomic's complaint and almost two years since the start of trial in this case. Given that passage of time and all of the effort of the parties and the Court, Yankee Atomic moved for leave to amend its complaint in order to facilitate the Court's award now of the damages Yankee Atomic has incurred due to the government's partial breach of contract through 2002, while preserving Yankee Atomic's claim for damages incurred after 2002 in a subsequent round or rounds of litigation. Motions for leave to amend complaints ­ whether under Rule 15(a) or Rule 15(d), as explained in Yankee Atomic's opening submission ­ are freely granted. The government's opposition ("Govt. Resp.") supplies no meritorious basis to deny Yankee Atomic's request. Instead, the government's opposition primarily seeks to minimize the parties' and Court's efforts to date, arguing that the Court should limit consideration of damages to those incurred only up to the filing of the Complaint in

1

This reply should also be deemed applicable to Connecticut Yankee Atomic Power Co. v United States, No. 98-154C and Maine Yankee Atomic Power Co. v. United States, No. 98-474C.9

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February 1998 ­ less than one month after DOE's breach. The government's arguments against permitting leave to amend are meritless. I. The Government's Statute-of-Limitations Argument is Without Merit The government's primary response to Yankee Atomic's straightforward motion for leave to amend is that Yankee Atomic should be deprived recovery of damages it incurred due to the government's breach during the purported "gap" between the filing of the complaint and six years prior to the filing of the motion to amend. This refrain crops up in every segment of the government's opposition brief. See Govt. Resp. 6-11, 12-13, 14-17. It is also meritless, both as a substantive matter and as a basis for denying leave to amend. Yankee Atomic fully addressed this purported "gap" issue in its motion to amend, see Motion to Amend at 6-10, and the government's own explanation of its argument highlights its lack of merit. For example, the government contends that the "incidents that Yankee attempts to encompass through its 1998 through 2000 damages claims" are "all . . . separate causes of action." Id. at 17. But Yankee Atomic's proposed amended complaint refers not to separately actionable, post-1998 "incidents" of government conduct, but rather to the continuing, post-1998 incurrence of damages by Yankee Atomic. And in any event, as explained in the Motion to Amend at 9-10, even if the government's view of the accrual of Yankee Atomic's cause of action was correct, Yankee Atomic should still be granted leave to amend its complaint to avoid a jurisdictional gap in the Court's ability to provide an adequate remedy for the government's partial breach of contract. The government mentions Intrepid v. Pollock,

2

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907 F.3d 1125 (Fed. Cir. 1990), see Govt. Resp. at 13, n.6, but the government fails to acknowledge the Federal Circuit's ultimate holding in that case ­ ". . . we hold that the trial court abused its discretion in refusing to allow the supplemental and amended pleadings." Id. at 1130. And the government does not even mention the other authorities cited in the Motion to Amend on this issue. See Motion to Amend at 9-10, citing Mathews v. Diaz, 426 U.S. 67, 75 (1976); Black v. Secretary of Health and Human Servs., 93 F.3d 781, 790 (Fed. Cir. 1996). Lacking any response to Yankee Atomic's motion, and fully aware that the strong weight of this Court's precedent counsels in favor of freely permitting leave to amend, the government resorts to arguing that the recent order in Pacific Gas & Elec. Co. v. United States, No. 04-0074C, slip op. (Fed. Cl. March 30, 2006) ("PG&E"), supports its position here. See Govt. Resp. at 9. But PG&E does nothing of the sort. Judge Hewitt read Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005), as limiting consideration of damages in a partial breach of contract case to those incurred through the date of an amended complaint ­ a notion with which there is not universal agreement in the Court.2 But more important for purposes of this motion for leave to amend, the Court in PG&E did not accord the significance to the filing of an amended complaint that the government argues for here. Notwithstanding the fact that the last amended complaint in that case was filed in January 2004, the Court decided that it would consider damages incurred through the end of 2004 at trial in June 2006 and that
2

Judge Lettow, for example, has made clear that he disagrees with the government's reading of Indiana Michigan as limiting consideration of damages to only those incurred up to the time of an amended complaint. See Systems Fuels, Inc. v. United States, No. 03-2623C (Fed. Cl.), Tr. of Hrg. of March 14, 2006 at 5-12 ("I just don't accept your reading of Indiana Michigan at all. I hate to say that, but it's just not plausible." Id. at 10-11), and Order of March 14, both attached hereto as Exhibit 1. 3

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the Court would simply "deem plaintiff's complaint to be amended and supplemented" through the end of 2004. See PG&E, slip op. at 11. PG&E therefore supports leave to amend here ­ not the other way around. II. The Government Fails to Establish Grounds for Denying Leave to Amend The government attempts to fashion its argument regarding the statute of limitations as reflecting "futility" in the amendment, see Govt. Resp. at 14, but the government ignores the fact that its statute-of-limitations argument only applies to the supposed "gap" period. As explained in the Motion to Amend, even if the government's view of the accrual of Yankee Atomic's complaint were correct and even if there was a "gap" in the jurisdiction to award Yankee Atomic relief for damages incurred in the 1998-2000 period that could not be cured through amendment of the complaint, amendment would still be appropriate to address damages incurred after 2000. Thus, the government's "futility" argument is without merit. The government also suggests that Yankee Atomic unduly delayed seeking leave to amend. See Govt. Resp. 18. But Yankee Atomic's motion was filed shortly after the hearing before this Court at which the amendment issue was aired, and just days after the time ran for the parties to seek additional review of Indiana Michigan. More fundamentally, the government does not attempt to explain how filing of Yankee Atomic's motion to amend a few days, a few months or even a few years earlier would have altered the conduct of the litigation. As the Federal Circuit explained in Intrepid in rejecting a similar argument that an effort to amend or supplement a pleading came to late, "[t]here is no reason to apply a statue of limitations when, as here, the respondent has had notice from the beginning that petitioner was trying to enforce a claim against it."

4

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907 F.2d at 1130, quoting Tiller v. Atlantic Coast Line R.R., 323 U.S. 574, 581 (1945). Here, the government has obviously been on notice of Yankee Atomic's claims against it since the outset of the litigation, and the government has had a full and fair opportunity to defend against those claims. The government also asserts that it would be prejudiced through the amendment because it would result in the loss of a statute-of-limitations defense. See Govt. Resp. at 17. The government cites Elbaor v. Tripath Imaging, Inc., 279 F.3d 314 (5th Cir. 2002) and Phillips v. Ill. Central Gulf R.R., 874 F.2d 984 (5th Cir. 1989) for the proposition that loss of a statute-of-limitations defense can constitute prejudice. Govt. Resp. at 17. But the government fails to inform the Court that the plaintiffs in those cases were seeking leave pursuant to Fed. R. Civ. P. 41(a) to dismiss without prejudice claims subject to statute of limitations defenses in the jurisdictions in which they had been filed so that the same claims could be refiled in other jurisdictions with more favorable limitations periods. 279 F.3d at 318-19; 874 F.2d at 985-86. Such forum-shopping concerns may well suggest prejudice. Those concerns also are totally inapplicable to Yankee Atomic's motion to amend its complaint under RCFC 15 here. The government also complains that amendment to facilitate award of damages through 2002 is inappropriate, because Yankee Atomic only provided the government with cost estimates for 2002. See Govt. Resp. at 18-19.3 This argument is hardly a ground for denying the Motion to Amend; it goes to the Court's exercise of its discretion
3

The government's assertion that Yankee Atomic did not provide cost data relating to its 2002 damage claim is demonstrably wrong. This Court permitted the government the opportunity to conduct a thorough audit of Yankee Atomic's damage claim (and those of Connecticut Yankee and Maine Yankee). Those 2003 audits provided ample opportunity for the government to obtain data and other information pertinent to Yankee Atomic's claim for costs incurred in 2002. 5

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to fashion an appropriate damage award. And the government's argument is wrong on its merits. Although Yankee Atomic's damage claim for 2002 is based on estimates, as we have explained previously, there is nothing wrong with basing a damages award on estimated costs. See, e.g., Yankee Atomic's Supplemental Post-Trial Brief Addressing Indiana Michigan at 15. And contrary to the government's argument, see Govt. Resp. at 19, the Federal Circuit's decision in Indiana Michigan did not address this issue. The Federal Circuit's concern was whether the government might ultimately perform so that Indiana Michigan would never suffer any damages at all. 422 F.3d at 1376. Conclusion Yankee Atomic has sought for eight years to collect damages due to the government's unquestioned partial breach of contract. The government's procedural arguments against amending Yankee Atomic's complaint are not only without merit, they also belittle the long efforts of the parties and the Court in resolving Yankee Atomic's damage claims. Yankee Atomic's Motion to Amend will efficiently provide a full record for review by facilitating the award of damages incurred through 2002 now while preserving consideration of future damages without causing the government to suffer any prejudice. The motion to amend should be granted.

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Dated: April 17, 2006

Respectfully submitted, s/ Jerry Stouck JERRY STOUCK Greenberg Traurig, LLP 800 Connecticut Avenue, NW Suite 500 Washington, DC 20006 (202) 331-3173 phone (202) 261-4751 fax Counsel for Plaintiff YANKEE ATOMIC ELECTRIC COMPANY

Of Counsel: Robert L. Shapiro GREENBERG TRAURIG, LLP

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Exhibit 1

Case 1:04-cv-00074-ECH Case 1:98-cv-00126-JFM

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Filed 03/28/2006 Filed 04/17/2006

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UNITED STATES COURT OF FEDERAL CLAIMS
SYSTEM FUELS, INC. AND ENTERGY ARKANSAS, INC., Plaintiffs, v. UNITED STATES, Defendant. ){PRIVATE } ) ) ) ) ) Docket No.: ) ) ) )

03-2623C

Pages: Place: Date:

1 through 39 Washington, D.C. March 14, 2006

HERITAGE REPORTING CORPORATION
Official Reporters 1220 L Street, N.W., Suite 600 Washington, D.C. 20005-4018 (202) 628-4888 [email protected]

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1 IN THE UNITED STATES COURT ) ) ) ) ) ) ) ) ) ) OF FEDERAL CLAIMS SYSTEM FUELS, INC. AND ENTERGY ARKANSAS, INC., Plaintiffs, v. UNITED STATES, Defendant.

Docket No.:

03-2623C

Courtroom 6, Room 507 National Courts Building 717 Madison Place N.W. Washington, D.C. Tuesday, March 14, 2006 The parties met, pursuant to notice of the Court, at 10:00 a.m. BEFORE: HONORABLE CHARLES F. LETTOW Judge

APPEARANCES: For the Plaintiffs: ALEX D. TOMASZCZUK, Esquire JACK Y. CHU, Esquire Pillsbury Winthrop Shaw Pittman, LLP 1650 Tysons Boulevard McLean, Virginia 22102 (703) 770-7940

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2 APPEARANCES: (Cont'd.) For the Defendant: JOSHUA E. GARDNER, Esquire HAROLD LESTER, Esquire KEVIN CRAWFORD, Esquire U.S. Department of Justice Civil Division Commercial Litigation Branch 1100 L Street, N.W. Washington, D.C. 20530 (202) 305-7583

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3 1 2 3 THE CLERK: All rise. P R O C E E D I N G S (10:00 a.m.) The United States

4 Court of Federal Claims is now in session, the 5 Honorable Charles Lettow presiding. 6 THE COURT: Please be seated. Not that I

7 brought in half the library, but I just thought a 8 little reference help might be needed. 9 Good morning. The case before the Court

10 this morning is System Fuels, Inc. and Entergy 11 Arkansas, Inc. v. United States, No. 03-2623. 12 For the record, Mr. Tomaszczuk, would you

13 introduce yourself and your colleague? 14 15 morning. MR. TOMASZCZUK: Yes, Your Honor. Good

This is Alex Tomaszczuk of the law firm

16 Pillsbury Winthrop Shaw Pittman, and I represent the 17 Plaintiffs here today, Systems Fuel, Inc. and Entergy 18 Arkansas, Inc., and with me is my associate, Jack Chu. 19 20 THE COURT: Welcome.

Mr. Gardner, would you introduce yourself

21 and your colleagues? 22 MR. GARDNER: Yes. Josh Gardner on behalf

23 of the United States.

With me today is Harold Lester

24 and Kevin Crawford, both from the Department of 25 Justice. Heritage Reporting Corporation (202) 628-4888

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4 1 THE COURT: Welcome. It's good to see 2 everyone again. 3 We have in hand a motion for It's actually partial The Court had denied it in part and The outstanding issue is the

4 reconsideration. 5 reconsideration.

6 deferred action in part.

7 time period to be covered by the claims of damage at 8 the trial that is forthcoming in February. 9 The Court has, as you might imagine, reached

10 some tentative conclusions in that regard, but they 11 are still very tentative. We'd like to hear from

12 counsel, which is why this hearing seemed appropriate. 13 14 Mr. Gardner, I wonder if you'd proceed? MR. GARDNER: Thank you, Your Honor. May it

15 please the Court. 16 Frankly, Your Honor, the government does not

17 have much to say outside of the subjects that we 18 briefed, but I think maybe highlighting some 19 particular portions of what we briefed and then being 20 available to answer questions might be the best 21 approach in this case. 22 In Indiana Michigan, the Federal Circuit

23 articulated a bright line rule for establishing the 24 scope of damages in a partial breach case such as this 25 one. Specifically, the Federal Circuit held that Heritage Reporting Corporation (202) 628-4888

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5 1 partial breaches, such as the one in this case, fall 2 under Rule 26(1)(e) of the Restatement 2d, Judgments, 3 rather than 26(1)(b). 4 The Federal Circuit explained that pursuant

5 to 26(1)(e) under a claim for partial breach of 6 contract damages are limited to the date of suit and 7 further referred to comment G of that same section, 8 which defines the date of suit as the time of the 9 institution of the action. 10 Here, absent a motion for leave to file a

11 supplemental or amended complaint, the scope of 12 damages in this case should be limited to the time of 13 the filing of SFI's current amended complaint, which 14 currently is May 13, 2005. 15 THE COURT: Mr. Gardner, just at the outset

16 the Court doesn't agree with your fundamental premise. 17 18 19 We might as well start there. MR. GARDNER: THE COURT: Okay. You're taking the decision in

20 Indiana Michigan as if it was a single note on this 21 issue. 22 It isn't. I'm going to read you from the decision. "We agree with the exceptions to

23 It's 422 F.3d 1378.

24 the rules of mergers and bars set out in Restatement 25 2d, Judgments, Sections 26(1)(b) and (e)," and then it Heritage Reporting Corporation (202) 628-4888

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6 1 goes on to say, "Indiana Michigan's grievance falls 2 within subsection (e)'s exception for injury 3 experienced during the execution phase of a continuing 4 contract. Because it has sued for partial breach,

5 ongoing obligations exist for both parties." 6 The reason it couldn't take any action under

7 26(1)(b) of the Restatement is that that portion of 8 the Restatement is reserved for the Court, not the 9 parties. (e) is reserved to the parties. I'm just

10 going to read 26(1)(e). 11 26(1)(e) says, "For reasons of substantive

12 policy in a case involving a continuing or recurrent 13 wrong, the Plaintiff is given an option to sue once 14 for the total harm, both past and prospective, or to 15 sue from time to time for the damages incurred to the 16 date of the suit and chooses the latter course." 17 That's an option that the Plaintiff has. 18 26(1)(b) doesn't say that. It says, "The

19 Court in the first action has expressly reserved the 20 Plaintiff's right to maintain the second action." 21 did that. 22 MR. GARDNER: I understand, Your Honor, and I

23 maybe to address your question -24 THE COURT: I'm just saying the Court in

25 Indiana Michigan could not have issued any ruling Heritage Reporting Corporation (202) 628-4888

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7 1 based on 26(1)(b) even though it expressly said it 2 agreed with the exceptions to the rules of merger and 3 bar stated not only in that portion of the 4 Restatement, but in 26(1)(e) because the Court hadn't 5 acted under 26(1)(b). 6 7 Gardner. 8 MR. GARDNER: That's fine, Your Honor. I'm Let's just start from that premise, Mr.

9 happy to address that premise. 10 I think let's go back to first principles

11 and what is the underlying purpose behind 26(1)(b) 12 versus 26(1)(e). I think what's helpful here is to

13 refer to Section 25 of the Restatement 2d, Judgments, 14 which gives illustrative examples as to when 26(1)(b) 15 would be applicable. 16 The examples it gives of when 26(1)(b) would

17 be applicable deal with a very different situation 18 than partial breaches. 19 claims for damages. 20 For example, one of the illustrations it That deals with alternative

21 gives is when a party brings a claim for breach of 22 contract and as an alternative a claim for 23 restitution, and at the time of trial the Plaintiff 24 realizes or recognizes that the breach of contract 25 claim the Plaintiff will not be able to satisfy its Heritage Reporting Corporation (202) 628-4888

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8 1 burden of proof and so that it may then ask to 2 supplement the complaint and make a claim for 3 restitution. 4 If the Court were to deny such

5 supplementation then the Plaintiff may be able to 6 request from the Court under 26(1)(b) the right in the 7 final judgment to come back at a later time and make a 8 claim for restitution based upon those same facts and 9 circumstances that supported the breach. 10 THE COURT: Mr. Gardner, those circumstances

11 -- and I recognize that you're right; I was looking at 12 comment F to Restatement Section 25 earlier -- just 13 don't have any bearing on this situation. 14 15 MR. GARDNER: THE COURT: I agree, Your Honor. In fact, the key problem here

16 and the one reason I was interested in hearing you is 17 that we really have to have an agreed or understood -18 one or the other -- cutoff date for the damages to be 19 put forward at trial such that both sides have a full 20 and fair opportunity to address damages. 21 As you're well aware and as Mr. Lester and

22 especially Mr. Crawford are well aware, the Court had 23 that situation in Tennessee Valley Authority. That's

24 because the date of the prior cutoff for the fiscal 25 year for Tennessee Valley Authority was approximately Heritage Reporting Corporation (202) 628-4888

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9 1 nine and a half months before trial. 2 3 MR. GARDNER: THE COURT: That's correct. It gave people an opportunity to

4 look at the accounting system from the perspective of 5 completed records of costs and expenses. There was no

6 misunderstanding in Tennessee Valley Authority about 7 what was going on. 8 The Court doesn't want any misunderstanding The question is whether or not the

9 in this case.

10 government would be prejudiced by going to trial in 11 February when the cutoff date was December 31. 12 MR. GARDNER: Well, the direct answer to

13 that question, Your Honor, is yes, we would be 14 prejudiced. 15 Again, as you just mentioned, there were

16 approximately nine and a half months between the scope 17 of damages cutoff in TVA and the date of trial. In

18 this case we're talking about six weeks between the 19 end of cutoff damages and the beginning of trial. 20 I think what's important to note here is in

21 TVA this Court focused upon the notion that TVA's 22 damages would be audited because it limited it to its 23 most recent fiscal year. 24 In this case we're not going to have audited

25 damages for the entirety of 2006 by the time of trial Heritage Reporting Corporation (202) 628-4888

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10 1 in February 2007. Not only that; I mean, all these 2 costs, at least a portion of them in 2006, will be 3 complete estimates. 4 THE COURT: Well, you don't know. Whatever

5 happens, they're not going to be estimates. 6 Let's just start from the premise that you That's not

7 have to deal with audited financials. 8 necessarily so.

What you have to deal with though are

9 real numbers, and you have to have an opportunity to 10 examine those numbers. 11 concerned about. 12 Let's just start from another foundation. That's what the Court is

13 From all the developments recently, it appears that 14 these cases are going to be going to trial or you're 15 going to have to settle them, one way or another, on a 16 fairly regular basis. 17 Every six years, as things keep rolling

18 along now, we're going to be having these damage 19 trials. Let's not put everyone in a position where we

20 don't have adequate ground rules. 21 MR. GARDNER: I agree, Your Honor, and that

22 is why I think we look to Indiana Michigan and the 23 bright line rule it articulates. 24 Court disagrees with that premise. 25 THE COURT: Mr. Gardner, I just don't accept I understand this

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11 1 your reading of Indiana Michigan at all. 2 say that, but it's just not plausible. 3 MR. GARDNER: Whether or not the Court I hate to

4 agrees with the government's interpretation of Indiana 5 Michigan, the government certainly agrees with you 6 that there should be ground rules. 7 We believe Indiana Michigan constitutes such

8 ground rules, but to the extent the Court disagrees 9 there needs to be something there, some certainty, 10 some bright line that both parties in all these cases 11 can agree upon going forward. 12 13 principle. 14 THE COURT: The Court accepts that

That's why we're here today. MR. GARDNER: Understood, Your Honor.

15 Again, the government's position obviously is that 16 Indiana Michigan creates those ground rules. 17 Putting that to one side, understanding your

18 disagreement with that, then I think we're left in a 19 bit of a quandary. 20 THE COURT: It's not disagreement. I just I'm

21 think you're wrong in reading Indiana Michigan. 22 sorry. 23 24 It's that simple. MR. GARDNER: THE COURT:

I understand, Your Honor. I had decided TVA before Indiana

25 Michigan or the first TVA decision before Indiana Heritage Reporting Corporation (202) 628-4888

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12 1 Michigan came up, and the Court was well aware in 2 Indiana Michigan of what this Court had done in 3 Tennessee Valley Authority. 4 MR. GARDNER: It's that simple. Then I think

I understand.

5 going to the next level there needs to be some ground 6 rules. 7 The government has never opposed the filing

8 of supplemental or amended complaints when it doesn't 9 prejudice the government. 10 THE COURT: I'm just saying they are not

11 necessary when action has been taken under Restatement 12 26(1)(b). The question though is in this particular

13 case because of the timing of trial whether the 14 appropriate cutoff is the end of the fiscal year prior 15 to trial. 16 MR. GARDNER: To answer that question

17 directly, the government's view is it is not. 18 THE COURT: What do you think the

19 appropriate cutoff is? 20 MR. GARDNER: We talked about this

21 internally, and it was a little abstract because we 22 did believe there was a requirement -- we do believe 23 there is a requirement -- that a plaintiff files a 24 supplemental complaint. 25 Putting that to one side, we do think that Heritage Reporting Corporation (202) 628-4888

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13 1 there is a utility in having audited financials from 2 the Plaintiff because absent that the government is 3 going to have to go in and audit those financials. 4 THE COURT: You had to in Tennessee Valley

5 Authority anyway. 6 MR. GARDNER: To a limited extent that's

7 correct, although with the nine months preceding trial 8 at least we had something more definitive than six 9 weeks after the cutoff of damages to begin proceeding 10 to trial. 11 I think an important point, at least two One, the fact that a plaintiff like

12 important points.

13 SFI is going to claim that it has costs as of December 14 2006 doesn't mean that it's necessarily incurred those 15 costs. It takes time to go through billing.

16 Sometimes we've experienced two months between the 17 receipt of an invoice and the payment of those 18 invoices. 19 THE COURT: So you're saying an accrued cost

20 is not a cost? 21

It actually has to be a paid cost? I'm saying it has to be an

MR. GARDNER:

22 incurred cost for the government to determine whether 23 or not -24 25 THE COURT: MR. GARDNER: That's not what I asked. Okay.

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14 1 THE COURT: Are you denying an accrual 2 basis, and you're saying a bill has to be paid? 3 MR. GARDNER: I think the government's view

4 is that certainly we would expect to see that a cost 5 has been incurred; that something has been paid. 6 THE COURT: Now, they're different. Whether

7 or not something has been incurred for accrual and on 8 a cash basis are quite different, Mr. Gardner. 9 10 11 question. 12 MR. GARDNER: I frankly cannot, sitting here MR. GARDNER: THE COURT: I understand that, Your Honor. Give me an answer to my

13 right now, tell you what the government's position is 14 with respect to accrual or cash basis. 15 that I've sufficiently thought that out. 16 THE COURT: Well, it came up in Tennessee I'm not sure

17 Valley Authority, but I think the question was 18 satisfied on either ground. 19 answer. 20 MR. GARDNER: I'm not trying to be coy with I really would like an

21 you, Your Honor.

I am telling you that I haven't

22 sufficiently thought that out to give you an 23 articulable position. 24 25 answer. I apologize.

I can go back, and I can get you that I can file something supplemental. Heritage Reporting Corporation (202) 628-4888

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15 1 THE COURT: Let's go back to the question of 2 what you think an appropriate cutoff date is. 3 MR. GARDNER: I would think that

4 December 31, 2005, the end of their most recent 5 audited financials prior to trial, would be 6 appropriate. 7 THE COURT: So System Fuels and Entergy

8 Arkansas have to bring another suit before the end of 9 2011? 10 11 correct. 12 13 14 2011. 15 THE COURT: Well, let's just find out. You THE COURT: MR. GARDNER: Okay. No. No. I believe it is Wait. 2010. 2010 I believe would be

MR. GARDNER:

16 said December 31. 17 18 19 2005. It's 2004. 2005?

When you said 2005, it's not 2005.

MR. GARDNER:

No.

I do mean December 31,

That would be the most recent audited

20 financials we would receive prior to the 2007 trial. 21 22 23 THE COURT: MR. GARDNER: THE COURT: So it is 2011. That's correct. They would have to bring another

24 suit before December 31, 2011, either another suit or 25 they'd have to file a supplemental complaint, one or Heritage Reporting Corporation (202) 628-4888

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16 1 the other. 2 MR. GARDNER: I believe that to be the case,

3 Your Honor, yes.

I think that to the extent the Court

4 believes there needs to be a reasonable cutoff other 5 than Indiana Michigan, I think that strikes a balance 6 between prejudice to the government and prejudice to 7 the Plaintiff. 8 We recognize that these are continuing

9 breaches, and Plaintiffs are going to continue to come 10 back presumably to claim future costs. At the same

11 time, the government needs some certainty that these 12 costs were incurred, and I think that would strike an 13 appropriate balance focusing on the audited financials 14 that a particular utility has. 15 THE COURT: Why do you need audited

16 financials when you are going to go back in and look 17 anyway? 18 MR. GARDNER: Well, I think that goes to the When you have

19 nature of what we're looking at.

20 audited financials from a Plaintiff, all the 21 government needs to do at that point, to my 22 understanding, is we call it ticking and tying. 23 making sure the invoice goes to the payment, the 24 journal voucher or what have you. 25 That process, it's my understanding, and I'm Heritage Reporting Corporation (202) 628-4888 We're

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17 1 not an accountant, is significantly easier when you 2 have the company that has audited the financials. 3 They're all right there, and it's a pretty straight 4 line. 5 THE COURT: That has a lot to do with the It doesn't have to do

6 company's accounting system.

7 with whether they're audited or not, Mr. Gardner. 8 MR. GARDNER: Well, I do think it's a little I don't

9 bit of both.

Again, I am not an accountant.

10 represent to know a lot about accounting principles, 11 but I do understand from the accountants I've used in 12 past cases that they believe it is significantly 13 easier to determine whether these costs were incurred 14 when we have audited financials. 15 THE COURT: You don't believe in 10-Qs or

16 something like that? 17 MR. GARDNER: Do I believe in them? They

18 are what they are.

Do I think that a 10-Q is a

19 reasonable basis to determine that a claim has been 20 incurred? 21 I don't know the answer to that. THE COURT: The SEC views them as

22 appropriate information for investors in public 23 companies. 24 MR. GARDNER: That's true, Your Honor, but

25 I'm not sure though that that necessarily takes to the Heritage Reporting Corporation (202) 628-4888

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18 1 next step that that is an appropriate basis for 2 determining damages. 3 4 THE COURT: MR. GARDNER: For damages? I don't know. I have not

5 looked at that issue, but I don't think that to be the 6 case necessarily. 7 THE COURT: I'm satisfied you don't know,

8 Mr. Gardner. 9 MR. GARDNER: Excellent. I really don't

10 have much else to say other than I don't believe that 11 bringing damages to the end of 2006 for a February 12 2007 trial is appropriate. 13 the government. 14 to -15 THE COURT: Let me tell you what the Court's I think it will prejudice

We will not have a sufficient time

16 concern is. 17 18 MR. GARDNER: THE COURT: Okay. The discovery cutoff is

19 September 1. 20 21 22 MR. GARDNER: THE COURT: MR. GARDNER: November. November. November 3. We amended the

23 scheduling order. 24 THE COURT: Don't tell me I'm a little

25 behind on that. Heritage Reporting Corporation (202) 628-4888

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19 1 MR. GARDNER: Approximately I believe six 2 weeks ago we amended the scheduling order. 3 THE COURT: You're right. There's a

4 distinction between the order that was entered on the 5 20th of January, which was September 1, and that which 6 was amended on January 23, which applies November 3. 7 We're talking about fact discovery in that

8 respect, correct? 9 10 Honor. 11 time. 12 THE COURT: But you understand I'm concerned MR. GARDNER: It's actually both, Your

Fact and expert discovery close at the same

13 about fact discovery? 14 15 MR. GARDNER: THE COURT: Yes. I understand.

What experts have you

16 identified, Mr. Gardner? 17 MR. GARDNER: We have not yet. Our

18 obligation to identify experts is I believe in July, 19 if I'm not mistaken, in this case. 20 21 July 11. 22 23 24 25 yes. Heritage Reporting Corporation (202) 628-4888 MR. GARDNER: THE COURT: MR. GARDNER: Yes. Is that correct? I believe that to be correct, THE COURT: Service of the expert reports,

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20 1 THE COURT: Do you plan on having an 2 accounting expert or someone who will examine the 3 damage claims? 4 MR. GARDNER: Yes, sir. In fact, I can

5 represent to you we've already begun that process. 6 We've been working cooperatively with Plaintiff to get 7 an understanding of their accounting system to start 8 tracking the costs. 9 already. 10 THE COURT: What would happen if the Court We have begun that process

11 contemplated that a midyear cutoff, that is something 12 in the range of June 30, would be more appropriate? 13 MR. GARDNER: I'm sorry. May I have one

14 moment, Your Honor? 15 16 17 THE COURT: (Pause.) MR. GARDNER: I think Mr. Lester and I had Yes. Certainly.

18 the same thought.

The only problem with doing that is

19 then we'll have to issue supplemental reports more 20 likely than not because our reports are due in July. 21 The damages are going to cut off in June. 22 going to be that overlap. 23 I think that one consequence is we either There's

24 move back the expert discovery, which I'm not sure SFI 25 is going to want to do, or we move the date up a Heritage Reporting Corporation (202) 628-4888

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21 1 little further. 2 THE COURT: Well, you have a date of

3 August 11, 2006, for exchange of any expert rebuttal 4 reports. 5 MR. GARDNER: I believe that to be the case,

6 yes, although I don't know that our doing a 7 supplemental report is necessarily rebuttal. 8 THE COURT: I'm just trying to sort through

9 a set of questions involving the particular dates. 10 All right. 11 12 13 14 MR. GARDNER: THE COURT: Thank you, Your Honor. Thank you, Mr. Gardner.

Mr. Tomaszczuk? MR. TOMASZCZUK: May it please the Court.

15 Just a few words about the law, and then we can talk 16 about what I understand to be some of the Court's more 17 practical concerns. 18 Number one, it has seemed to us that this

19 Court's April 20, 2005, decision is fully consistent 20 with the Federal Circuit decision in Indiana Michigan, 21 and in that regard I would like to quote from the 22 Federal Circuit decision in Indiana Michigan. 23 I'm specifically quoting at 422 F.3d 1377,

24 the page previous to that cited by the Court in its 25 remarks, where the Federal Circuit stated at the Heritage Reporting Corporation (202) 628-4888

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22 1 beginning of a paragraph, "Indiana Michigan can, 2 however, obtain recovery for postbreach damages as 3 they are incurred." 4 The government, in its motions and in its

5 filings in other spent nuclear fuel cases, 6 consistently ignores that language. As they are

7 incurred I think connotes just what the Court appears 8 to be suggesting here today; that the cutoff is not 9 the bright line rule that Mr. Gardner articulated of 10 the filing of a complaint or amended complaint, but 11 some reasonable date on which the parties can agree or 12 the Court can impose to allow the government to 13 conduct discovery and at the same time let Plaintiff 14 recover those costs at some point prior to trial 15 consistent with what I think is the underlying ruling 16 of the Federal Circuit in the Indiana Michigan case. 17 I would note -- I'm sorry to report I was

18 the trial attorney in Indiana Michigan -- indeed we 19 tried before Judge Hodges damages not only after the 20 date of the complaint up to the date of trial, but 21 beyond that. 22 Now, that's what the Federal Circuit held we

23 could not do in a partial breach case; that the cutoff 24 date is some date prior to trial to allow the 25 Plaintiff to recover damages as they are incurred. Heritage Reporting Corporation (202) 628-4888

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23 1 That's what the Federal Circuit, we submit, held. 2 THE COURT: One of the problems in these

3 cases, as you're well aware, Mr. Tomaszczuk, is that 4 one has absolutely no idea when DOE is going to begin 5 performance. 6 MR. TOMASZCZUK: That is a fair observation,

7 and it's a problem for operating utilities like those 8 here before the Court today. 9 I think the Court ought to be informed by

10 the first rule of this Court's rules, which in 11 pertinent part says that the rules ought to be 12 construed to allow for the just, speedy and 13 inexpensive determination of every action. 14 I think that the Court has to recognize,

15 number one, that the Plaintiffs are the non-breaching 16 parties; number two, that there's incredible 17 uncertainty with respect to when DOE is going to begin 18 to perform; number three, that these cases are very 19 expensive for any individual plaintiff to begin; and, 20 number four, in the interest of the efficiency of the 21 Court it seems to me that some date close to the date 22 of trial ought to be established so that the 23 Plaintiffs can recover as much as they can in an 24 individual action and defer having to file suit every 25 other year. Heritage Reporting Corporation (202) 628-4888

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24 1 For example, if substantial costs are 2 incurred in a future year you don't wait five years. 3 You file suit to recover those costs as they are 4 incurred. 5 I think from the standpoint of the Court

6 wanting to administer its docket and not be inundated 7 with these cases it makes some sense for the Court to 8 establish not a bright line rule of the filing of the 9 complaint, but some reasonable point in time where the 10 government can conduct discovery and the Court can 11 have some certainty that the costs were indeed 12 incurred. 13 THE COURT: Well, the Court is interested in

14 shall we say efficiency and efficiency derived from a 15 common understanding of what the cutoff date is 16 because it puts everyone in a position where they can 17 plan well in advance for their damages case on the 18 part of the Plaintiffs and the defense case on the 19 part of the government and have a relatively quite 20 organized presentation. 21 I was fortunate, and I hate to use a

22 personal pronoun, but this Court was quite fortunate 23 in having that circumstance in Tennessee Valley 24 Authority. Counsel, and one of them is sitting in

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25 1 were doing, and that's what this Court has in mind by 2 holding this hearing so that we get ourselves on a 3 common footing. 4 MR. TOMASZCZUK: And we don't dispute that,

5 Your Honor.

Indeed, I would note that in other cases

6 we have agreed with the government on a common cutoff 7 date. 8 I would also say, number one, that I don't

9 know exactly what Mr. Gardner means by audited 10 financials. I mean, we have presented to the

11 government already a very detailed expert report which 12 is backed up by books and records of the Plaintiffs 13 which establish what damages they're seeking in this 14 case. 15 If I were to bring them in here they would

16 be stacked up pretty deep, so already the government 17 has substantial knowledge about what the damages 18 claims in this case are. 19 I can also say that in one of the schedules

20 in those workpapers there is a fairly detailed 21 estimate, which is what we had to do at the time, of 22 projecting costs from January 2006 through December 23 2006. 24 25 Those costs total in this estimate $10,037,000. THE COURT: $10 million? $37,000.

MR. TOMASZCZUK:

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26 1 2 what date? 3 MR. TOMASZCZUK: Those were the 2006 THE COURT: And that was from what date to

4 estimated costs.

They're broken down into four or

5 five definite categories. 6 Dry cask procurement. We know we're going

7 to have to purchase casks for the dry storage 8 facility, and the cost estimated for that was $5.4 9 million. The government has these figures. Their

10 experts have had these figures for several months. 11 There was a cost estimate for dry cask loading, 12 $614,000. 13 THE COURT: When is the projection for dry

14 cask loading? 15 MR. TOMASZCZUK: These figures, Your Honor,

16 all refer to the period January 2006 through December 17 2006. 18 THE COURT: That's very helpful, Mr.

19 Tomaszczuk, but the problem is, and Mr. Gardner 20 helpfully corrected me on the fact discovery cutoff 21 date. 22 It's not September 1. It is November 3.

Some of the damages would actually be

23 incurred, to use Mr. Gardner's word, after the factual 24 discovery cutoff date. 25 Court. Heritage Reporting Corporation (202) 628-4888 That's what is bothering the

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27 1 MR. TOMASZCZUK: Well, my client will beat Then we need to pick 2 me over the head with a hammer.

3 a date that the Court feels will allow the government 4 to conduct discovery. 5 Again, I don't know about this term audited

6 financials, but in terms of -7 8 THE COURT: Well, we'll pass that. -- reasonable discovery

MR. TOMASZCZUK:

9 about the books and records that support the claim 10 that's before the Court. 11 about. 12 THE COURT: Is System Fuels part of a public That's what we're talking

13 company such that it files quarterly reports, as well 14 as annual reports? 15 16 today. MR. TOMASZCZUK: Mr. Smith is not here Whether or not

Certainly Entergy does.

17 Systems Fuel does I wouldn't want to misrepresent 18 without confirming that. 19 THE COURT: Then the best the Court can come

20 up with, given the factual circumstances that you're 21 talking about and that Mr. Gardner talked about, would 22 be a midyear cutoff -- that is, June 30 -- because 23 that ought to give the government's people and your 24 people a chance to compile actual incurred costs 25 through that half year. Heritage Reporting Corporation (202) 628-4888

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28 1 There might have to be some supplementation, 2 but as long as the supplementation is within the 3 bounds of the prior report it doesn't seem to be a big 4 problem. 5 I don't know what else to do in this

6 particular case, Mr. Tomaszczuk. 7 MR. TOMASZCZUK: Well, that's certainly

8 preferable to delaying the trial, which we would not 9 want to do. If that's the Court's ruling then we'll

10 accept that and live with it. 11 That gives us, I would note, four months --

12 July, August, September, October -- to conduct any 13 discovery with respect to those costs. 14 THE COURT: It's also seven and one-half

15 months prior to trial, and that's something that seems 16 entirely feasible given the Court's prior experience 17 in the Tennessee Valley Authority case -18 19 MR. TOMASZCZUK: THE COURT: Right.

-- where it was roughly nine and It just wasn't a

20 a half months prior to trial. 21 problem. 22 MR. TOMASZCZUK:

Your Honor, I would have to

23 say I would note, with all due respect to counsel for 24 the government, one would think that they've tried 25 several of these cases. By now I think they

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29 1 understand what these costs are. 2 facility. They're reracking. They're dry storage There's costs There may

3 associated with loading and moving casks. 4 be some modifications to the plant. 5

You know, there's about five or six

6 categories, and they come up again and again and again 7 and again. The notion that the government can't

8 possibly be ready for a trial in February if that's 9 the cutoff date is incomprehensible to me, with all 10 due respect. 11 THE COURT: Well, the Court is going to have

12 to get used to trying these cases on a fairly regular 13 basis because these aren't going to go away the way 14 the circumstances are playing out. 15 16 17 now. MR. TOMASZCZUK: THE COURT: No, they're not.

We might as well get used to it

Part of getting used to it is setting reasonable

18 ground rules that accommodate the needs of the 19 parties. 20 That's why we're here today. You think that something along the lines of

21 a cutoff on June 30 would be acceptable, even though 22 you don't want it? 23 prefer it? 24 MR. TOMASZCZUK: That would be an accurate That's too strong. You don't

25 statement, Your Honor.

I think we could live with it,

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30 1 and we will live with it even though we'd just as soon 2 capture those costs through the end of the year. I

3 understand what the Court's concerns are, and we'll 4 proceed accordingly. 5 THE COURT: Let's stop a minute. Do you

6 want to actually file an amendment to the complaint or 7 it's actually more like a supplemental complaint than 8 an amended complaint because the facts are the same. 9 You basically just pick up an additional quantum of 10 damages. 11 MR. TOMASZCZUK: Probably in an exercise of

12 caution we will do that here, but I would not do that 13 until we get closer to the date that the Court has 14 established because if the cutoff date is June 30, 15 2006, then I would probably want to file that amended 16 and supplemental complaint in July to make sure I 17 captured those costs to obviate any argument by the 18 government that I couldn't recover those costs because 19 I hadn't filed a complaint capturing them. 20 THE COURT: That's a prudent thing to do. The Court has been

21 Mr. Gardner has made his argument.

22 fairly explicit about what it thinks of that argument, 23 but in any event the Court of Appeals might have a 24 different view and so that's definitely a prudent 25 course, Mr. Tomaszczuk. Heritage Reporting Corporation (202) 628-4888

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31 1 MR. TOMASZCZUK: That's what I have 2 concluded, Your Honor, so I think we would file such a 3 motion for leave to file an amended supplemental 4 complaint. If the cutoff date is June 30, we would

5 file that in July of 2006. 6 7 8 9 Honor. 10 THE COURT: Well, I'd like to visit with you THE COURT: Mr. Gardner? MR. GARDNER: We have nothing further, Your Thank you very much.

11 a moment or so though. 12 13 MR. GARDNER: THE COURT: Okay. What happens when Mr. Tomaszczuk

14 on July 10 -- whatever in July -- comes up with a 15 motion for leave to file a supplemental complaint? 16 17 MR. GARDNER: THE COURT: What happens, Your Honor? What position does the

18 government take? 19 MR. GARDNER: Your Honor, I don't know I do know that this June 30

20 sitting here right now.

21 cutoff is going to create some problems for the 22 government in terms of now having to do a second 23 expert report, whether we call it supplemental 24 rebuttal or what have you. 25 I also think that we're going to need a bit Heritage Reporting Corporation (202) 628-4888

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32 1 of an assurance that after June 30 we're going to 2 promptly get those invoices and those documents that 3 will support the claimed costs because I think that is 4 obviously going to be a concern to the government. 5 Now, what position we take on whether or not

6 they're allowed to amend their complaint, I don't know 7 sitting here right now. I would have to think about

8 it, and that's the best answer I can give you. 9 THE COURT: Well, you have three and a half

10 months' notice that this is going to happen, or at 11 least say four months' notice this is going to happen. 12 13 MR. GARDNER: THE COURT: Yes. There are all sorts of

14 opportunities to plan ahead. 15 16 17 here. 18 MR. GARDNER: No, I don't think there will MR. GARDNER: THE COURT: That's correct. There shouldn't be any surprises

19 be a surprise.

It's really just going to come down to

20 whether or not the government is prejudiced by having 21 a discovery cutoff or a claimed damages cutoff that is 22 June 30. 23 Frankly, sitting here right now I don't know I'm going to have to talk to my

24 the answer to that. 25 auditors.

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33 1 internally with people at a higher pay grade than 2 myself frankly. 3 THE COURT: Do you think there's a

4 difference between the seven and a half months prior 5 to trial that you would have incurred costs in this 6 case and the nine and a half months in Tennessee 7 Valley Authority? 8 difference? 9 MR. GARDNER: I don't know, Your Honor. Let Do you think two months makes a

10 me just explain something. 11 You know, Mr. Tomaszczuk said the government

12 should be familiar with the costs these Plaintiffs 13 have incurred. Certainly in terms of the types of We've

14 costs we've obviously seen dry storage costs.

15 seen O&M costs before, but that doesn't mean that we 16 don't have to determine that a particular Plaintiff 17 actually incurred the costs they're claiming. 18 takes time. 19 THE COURT: That's why I asked you earlier That

20 about accrual and cost basis plaintiffs. 21 22 MR. GARDNER: THE COURT: I understand, Your Honor. I mean, I can't imagine that

23 there's a difference. 24 MR. GARDNER: I would hate to give you a I would rather give

25 hasty answer that's incorrect.

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34 1 you a thoughtful answer that is correct. I just can't 2 do that sitting here right now, so unless the Court 3 has further questions -4 THE COURT: All right. So you object to a

5 cutoff of June 30? 6 MR. GARDNER: When Plaintiff files a

7 supplemental or amended complaint shortly after 8 June 30, I think the government can take a position 9 then as to whether or not we would oppose that 10 supplementation or not. 11 Again, I don't know, one, if our accountants

12 can do this; two, how that's going to impact 13 discovery, so it's difficult for me to sit here right 14 now and tell you that. 15 I'm not trying to be coy or difficult. I

16 just don't know the answer. 17 THE COURT: I take it you also would object

18 if the Court exercised what authority it thinks it has 19 under Indiana Michigan and Restatement of Judgments 20 26(1)(b) to set a cutoff date of June 30, 2006? That

21 would give you an appellate issue you could talk about 22 to the Court of Appeals. 23 MR. GARDNER: We don't believe that it is

24 appropriate under Indiana Michigan to allow for a 25 claim of damages that postdates the complaint. Heritage Reporting Corporation (202) 628-4888

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35 1 THE COURT: Well, this Court is inclined to 2 give the Court of Appeals issues only when it has to. 3 4 MR. GARDNER: THE COURT: Understood. In this particular instance Mr.

5 Tomaszczuk is going to take a prudent course and 6 obviously is going to move to amend or supplement the 7 complaint in July. You can file what you want to file

8 then, Mr. Gardner, and I'm sure you will. 9 10 MR. GARDNER: THE COURT: Understood. It just seems appropriate in

11 this case to go forward with the preparations for 12 trial on the assumption that June 30, 2006, is going 13 to be the end date for the damages and proofs that 14 will be put forward at trial and that the government 15 is asked to defend. 16 17 18 19 20 end. 21 22 23 Honor. THE COURT: All right. Mr. Tomaszczuk? MR. GARDNER: Thank you, Your Honor. THE COURT: MR. GARDNER: Is there anything further? We have nothing further on our We understand. We understand.

MR. TOMASZCZUK:

I would just ask, Your

The Court will enter an order to that effect,

24 I presume? 25 THE COURT: I will not. Well, let me

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36 1 discuss that with you. 2 I guess at this point what I was inclined to

3 do is just to deny the deferred part of the motion for 4 reconsideration. I just don't want to make an

5 appellate issue out of a Court action under 26(1)(b) 6 when it doesn't seem necessary. 7 On the other hand, here we are on March 14,

8 and the transcript of this hearing will provide 9 everyone with notice about what the expectations are. 10 Do you propose something different, Mr.

11 Tomaszczuk? 12 13 Honor. 14 I am concerned, I should have to say, about MR. TOMASZCZUK: I think that's fine, Your

15 the government opposing our motion when we file it, 16 and my guess is they will couple it with a motion to 17 extend the trial date. 18 I'm adamantly opposed to that, Your Honor,

19 because I think this Plaintiff ought to be entitled to 20 present its damages case, and whatever the cutoff date 21 is I personally think June 30 is quite reasonable, but 22 I fear we'll be back before this Court arguing about 23 the propriety of our motion to amend and whether the 24 trial ought to be moved. 25 THE COURT: I doubt that, Mr. Tomaszczuk,

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37 1 because we have pretty good ground rules now about 2 what's going to happen and why. Frankly, I have nine

3 or 10 trials scheduled, and they go through May of 4 2007. 5 This is slotted in. Unless something happens, and it would have

6 to be drastic, this is going to go forward in February 7 of 2007. 8 9 Thank you. 10 THE COURT: Let me just think about this. MR. TOMASZCZUK: Very well, Your Honor.

11 There's another spent fuel case that goes to trial in 12 May. 13 MR. GARDNER: That's the Boston Edison case,

14 Your Honor. 15 THE COURT: Yes. Exactly. The trial I could

16 schedule is I wouldn't say absolutely full.

17 probably fit a couple day trial in there somewhere, 18 but it's close. 19 Unless something really drastic happens --

20 you never want to say never -- this trial is going to 21 go forward in February. 22 23 Thank you. 24 25 THE COURT: All right. Thank you very much. MR. TOMASZCZUK: Very well, Your Honor.

I look forward to seeing you again, but not for a Heritage Reporting Corporation (202) 628-4888

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38 1 while. 2 We'll wish everyone well in their endeavors

3 in getting ready for trial and anticipate that given 4 the capabilities and competence and experience of 5 counsel all this will go forward very smoothly in 6 February of 2007, about 11 months from now. 7 8 We're in recess. (Whereupon, at 10:45 a.m. the hearing in the

9 above-entitled matter was concluded.) 10 // 11 // 12 // 13 // 14 // 15 // 16 // 17 // 18 // 19 // 20 // 21 // 22 // 23 // 24 // 25 // Heritage Reporting Corporation (202) 628-4888

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39 REPORTER'S CERTIFICATE

DOCKET NO.: CASE TITLE: HEARING DATE: LOCATION:

03-2623C System Fuels v. United States March 14, 2006 Washington, D.C.

I hereby certify that the proceedings and evidence are contained fully and accurately on the tapes and notes reported by me at the hearing in the above case before the United States Court of Federal Claims.

Date:

March 14, 2006

Tammy Brodsky Official Reporter Heritage Reporting Corporation Suite 600 1220 L Street, N.W. Washington, D.C. 20005-4018

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS No. 03-2623C (Filed: March 14, 2006) ____________________________________ ) SYSTEM FUELS, INC., and ) ENTERGY ARKANSAS, INC. ) ) Plaintiffs, ) ) v. ) ) UNITED STATES, ) ) Defendant. ) ____________________________________) ORDER Pending before the court is that part of Defendant's Motion for Reconsideration of Certain Aspects of the Court's April 20, 2005 Opinion upon which action was deferred by the court's Scheduling Order of February 1, 2006. In that Scheduling Order, the court denied defendant's motion insofar as it requested reconsideration of the court's decision that plaintiffs may plead a takings claim as an alternative to a claim for breach of contract. The court deferred that part of defendant's motion requesting that the court reconsider its decision respecting the time period to be covered by the trial on damages scheduled for February 2007, and requested that plaintiffs respond to defendant's motion. The parties have briefed the deferred issue, and a hearing was held on March 14, 2006 to address defendant's motion. The deferred portion of defendant's motion for reconsideration is hereby DENIED for the reasons stated at the hearing of March 14, 2006. The court anticipates that plaintiffs will move in July 2006 for leave to file a supplemental complaint seeking damages through June 30, 2006 for defendant's partial breach of contract. It is so ORDERED.

s/ Charles F. Lettow Charles F. Lettow Judge